Lionsgate, Paramount, and MGM have joined forces to launch Epix, an HD …

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Three major movie studios are about to try an interesting experiment. They are launching a new TV network called Epix that will show their own recent films in HD, but they're going a step beyond by bundling it with an online, on-demand service that offers HD streaming of the same films over the Internet. Think of it like Hulu for movies that aren't yet out on DVD. Oh—and did we mention that the service will have no advertising and won't appear on your cable bill?

A new business model

The music industry was never much good at being a digital retailer—anyone remember MusicNet and Pressplay?—but TV networks and movie studios now seem to think they have learned the lessons of the past.

Like Hulu, the Epix movie service is a joint venture formed by the content owners; in this case, the service is powered by the movie studios Lionsgate, Paramount, and MGM. The Epix TV network will air movies that are in the "pay-TV" window, those weeks before a film appears on DVD in which it is available on pay-per-view or HBO, among others.

That doesn't sound so new, but Epix will be bundled directly into cable packages; under the current business model, it will never appear as a separate charge on the bill and will never have to be added to a package. If Epix can convince enough cable operators to sign on (it isn't yet announcing partners), the service will have an immediate competitive advantage over pay-TV channels with an additional monthly fee.

But the best part is that Epix viewers can access the same material online, on demand, at Epixhd.com. Ars spoke with Emil Rensing, chief digital office at Epix, who says that watching films online will be a two-click experience with full support for 720p streaming.

The video is offered through Flash and is multi-bitrate enabled; the player checks the available bandwidth every ten seconds to see if a larger or smaller stream is required. Epix currently creates six different encodings of each film which range from full HD support all the way down to 500Kbps (cell phone quality). In our own test preview of Iron Man, video was the best we have ever seen in a mainstream streaming service.

Pushing out that sort of data is bandwidth-intensive, and Epix would love to avoid streaming HD content across the public Internet wherever possible. One way to make that happen, which the company is currently pursuing, is to install caching servers directly in the data centers of ISPs with whom Epix has a relationship. (Rensing says that Epix does not require any sort of quality of service guarantees or bandwidth prioritization from ISPs.)

These "relationships" are one of the unique points about Epix. The company currently has no plans to offer content directly to consumers; it only wants to sign deals with TV distributors. These distributors certainly include the cable companies, but now also include Verizon's FiOS, AT&T's U-verse, and satellite services.

Epixhd.com will only be available to people who subscribe to one provider's TV offering and also subscribe to that same provider's Internet offering. That is, if Comcast were to offer Epix, users would need to pay for both Comcast cable and Comcast Internet in order to access the streaming, on-demand service. That's good for Comcast, and it helps them cover the cost of the service.

Do you Hulu?

Given that services like Hulu and Netflix On Demand work well and are increasingly popular, the real question is why the studios would launch their own distribution network instead of just offloading the films to partners already equipped to handle them?

Rensing insists that the services are just too different. While Hulu does offer some films, it's focused almost exclusively on TV at the moment and is ad-supported. Netflix On Demand doesn't have access to the same super-recent hit titles.

Left unsaid is the fact that controlling distribution is also a chance to make more money, if it's done right. Epix is pursuing a strategy that has similarities with ESPN's streaming service, ESPN 360, which is also sold directly to ISPs and not available to end users directly. Again, the charge for the service never shows up on a customer's bill but instead looks like a nice added bonus that ISPs can use to differentiate their service from rivals.

The downside is that those who like the Epixhd.com site (which looks fairly slick at the moment, even though development continues) and would gladly pay some monthly fee for access—well, they're out of luck.

An invite-only beta of Epixhd.com begins today, with a sign-up form for rolling admission over the next few months.

I'm confused by one thing... what's really in this for the cable companies? While differentiating yourself from the competition through a freebie that gets hidden in the cable bill is nice and all... this service would directly compete with video on demand, which I would imagine is a pretty nice cash cow for the cable company. For that matter, I could see this cutting in on the premium channel subscriptions. Why would you drop $20/mo. or more on a premium channel package to get movies when you get them on demand for free?

Jeppe said it first. :-( I have lost my faith in international movie services to curb international piracy. It's as if they don't bother, but still bother when it's about harrasing people. Gah. So annoying.

This sounds like it's the same model as how ESPN360 works, though in ESPN360's case, your ISP needs to be the folks who subscribe to the service, not (necessarily) your cable company. ESPN hasn't shut down 360 after at least two years, so I'm guessing they're making money on it, so perhaps this will actually work.

In ESPN360's case, a good bit of why the ISP needs to subscribe to it is that the ISP runs a reflector to minimize bandwidth usage outside the site. 720p sounds _huge_ if that's not what's going to happen here...

Originally posted by Mocker:Why would you drop $20/mo. or more on a premium channel package to get movies when you get them on demand for free?

I think they are talking about bundling only if you buy that premium channel content. My take was: Epix is a new HD Video-On-Demand channel, you buy movies from it on TV, and if you do you can watch them free online, OR you can buy them online and watch them free on TV. Not so groundbreaking, they are just extending their current business model to the online world in a logical way. No "freebies" other than you get more options to watch the content you pay for, which is nice.

Throughout the article, I'm thinking: "No embedded TV support. No cable DVR support. No Windows MCE support. No XBox 360 support." In today's day and age, there's more to competing in online video than simply offering the video in yet another flash player/silverlight player website. That in mind makes me wonder if the movie studios are once again, six months behind the curve.

The whole announcement amounts to a big pile of meh for me. If I can wait for the DVD on a movie, then I can wait for Netflix and there's little incentive to use or pay for EpixHD. If I really wanted to see it, I would have went to the movie theater. And to think that EpixHD's cost won't be passed on to the user is naive at best and misleading at worst. There will most certainly be an upsell of some sort associated with this by the cable companies to cover the cost.

Originally posted by Kressilac:And to think that EpixHD's cost won't be passed on to the user is naive at best and misleading at worst. There will most certainly be an upsell of some sort associated with this by the cable companies to cover the cost.

Well, duh. I've got a feeling my Comcast basic cable + 8MB combo isnt going to be good enough to get this service anyway...I'm sure they'll want me to upgrade to the HD package, and pay extra for a cable box (damn, if they are going to force me to use a cable box, they should be paying me for the dis-service).

I'm interested in trying the service, but not interested in paying more to get it.

Great big meh, I'm sure the movie studios will go out of their way to screw it up in some way that kills any interest in it. Maybe I won't be able to fullscreen videos and will have to watch it with that stupid red curtain border in the image. Maybe they will charge me close to the cost of a DVD (or -- View image here: http://episteme.arstechnica.com/groupee_common/emoticons/icon_rolleyes.gif -- just as much) to be able to stream it for a limited time. Maybe it will only be available for the super ultra mega price is not a factor cable plan. Whatever the case is, I'm sure they will manage to screw it up in more ways than one.

Originally posted by Kressilac:Throughout the article, I'm thinking: "No embedded TV support. No cable DVR support. No Windows MCE support. No XBox 360 support." In today's day and age, there's more to competing in online video than simply offering the video in yet another flash player/silverlight player website. That in mind makes me wonder if the movie studios are once again, six months behind the curve.

Exactly what I was thinking. But I'm also concerned about network neutrality as well. In addition, a few months ago, the movie studios were pushing for something like the broadcast flag to be enforced by law. They were arguing that it would let them expand their business model, to air movies before DVD's are released. Did they decide they should just start airing movies now, and get the law changed later?

It sounds really good, until you start thinking about the cable companies' desire to add bandwidth tiers to their service. Then it starts to sound like this "free" service might get to be very expensive if you stream more than a movie or two each month.

Not only will it require you have your TV and Internet through the same provider, you'll have to have any HD tier required by your provider in order to view the content. Epix may be the thing that pushes many subscribers to take the HD tier plunge, much to the delight of the provider.

Epix will probably get a per-subscriber fee from the provider, so the partners behind Epix will simply make more money for films they have already released, plus make money from HBO, Showtime or Starz for cable premium broadcasting of said movie and money for the DVD sales.

On the plus side, I already get my cable and Internet service from Cox and I have the HD tier. All I need is for Cox to get on board with this.

Originally posted by badfrog:Flash dependency, big fucking ugly "red-curtain" screen effect, bundling with cable. All this adds up to "Epyx Fail" from where I'm sitting.

quote:

Pushing out that sort of data is bandwidth-intensive, and Epix would love to avoid streaming HD content across the public Internet wherever possible.

Hmm. Yeah. That is a problem. I wonder why no-one's tried to solve that one yet... -- View image here: http://episteme.arstechnica.com/groupee_common/emoticons/icon_rolleyes.gif --

I thought that was odd to mention in the article as well. Netflix caches its servers already and I'd bet Amazon Unboxed and Hulu do as well even if it's only for the network redundancy feature. 24x7 uptime for video requires some sort of regional caching or you're at the mercy of the link to your central datacenter.

Rensing insists that the services are just too different. While Hulu does offer some films, it's focused almost exclusively on TV at the moment and is ad-supported. Netflix On Demand doesn't have access to the same super-recent hit titles.

This is only a fact because the studios don't want it to happen this way. There is nothing stopping the studios from offering this content on Hulu or Netflix other than themselves. This JUST offers them a way to do it where they have total control over the content and the ability to hide all costs to the consumers.

One way to make that happen, which the company is currently pursuing, is to install caching servers directly in the data centers of ISPs with whom Epix has a relationship.

Let me guess: studios are too cheap to pay for any of the existing CDN services (Limelight, Brightcove, Akamai) or even just team up with some decent cloud-provider (AWS, Mosso etc)...

...pathetic.

PS: focusing on 720p is another weird decision - did any of the usually worse-than-clueless-yet-arrogant studio "experts" do at least a half-decent implementation study prior making these seemingly weird decisions?

Originally posted by JournalBot:Thanks to an innovative business model, you won't see a charge for either service.

So, the "innovative" business model is that you have to have some two-pack from your ISP to access a specialized form of VOD? And, that the charge to the ISP by the studios gets hopefully buried into the margins of the two-pack?

First, I doubt that will happen. You'll probably have to pay a "service charge" to have access to EpixHD. I doubt Comcast et al. will willingly give one iota of their current margins away. My guess is this is exacerbated by the fact that most people that do Internet/TV do it from the same ISP already.

Secondly, even if they manage to bury it, what happen when the next studio comes along, and the next? Will the ISP be able to "bury" all those charges?

Hmm. Yeah. That is a problem. I wonder why no-one's tried to solve that one yet... Roll Eyes

Probably because BT isn't some magic bullet that solves all problems. I've tried the streaming version of BT and when it works it works well. When it doesn't there's everything from no connection, to buffering all the way through.

Originally posted by Kressilac:And to think that EpixHD's cost won't be passed on to the user is naive at best and misleading at worst. There will most certainly be an upsell of some sort associated with this by the cable companies to cover the cost.

Well, duh. I've got a feeling my Comcast basic cable + 8MB combo isnt going to be good enough to get this service anyway...I'm sure they'll want me to upgrade to the HD package, and pay extra for a cable box (damn, if they are going to force me to use a cable box, they should be paying me for the dis-service).

I'm interested in trying the service, but not interested in paying more to get it.

Originally posted by alphadog7:First, I doubt that will happen. You'll probably have to pay a "service charge" to have access to EpixHD. I doubt Comcast et al. will willingly give one iota of their current margins away.

While first part is true - it'll be eventually pushed down in the form of some usual fake "federal fee"*** - I don't think cable providers have a choice: either they get on board and retain some revenue or they will see their biggest ripoff schemes, the cable video service slowly melting down to the point where it turns into a loss leader.

As a side story: few weeks ago I decided to scale down my Time Warner cable TV service - thanks to the sleazy, constant price-gauging over the past 2 years it has ballooned over $170/mo only HBO as a single premium channel and a $45/mo cable internet - and I was shocked to learn that there are no packages listed on TWC's site anymore, they don't even pretend you have a choice.My bill says something about basic, DTV, standard service fees - not detailed, forget that, just mentions it - so I called them. When asked their CSR could not give me one straight answer when about what are these package levels and which channels are included in them - literally he kept saying "oh, everything is there, you dont' want to lose them" every time when I asked what I take opff standard or DTV etc.

This is simply ridiculous, I think - it's about time to break up these cable monopolies and regulate the market to end these market abuses.

Did I mention Time Warner's so-called "HD" channels really look like sh!t now? Most of them are very low-quality, upcoverted SD, some are even streched and there's the constant pizelation, macroblocking problems due to the inefficient/low bitrate encoder - truly an utter mess with the industry's highest-priced yet lowest quality "service"...

SO I guess my point is that I don't think cable providers have a choice: people like me are deserting in huge numbers - in the past 12-months all my friends cut off their $100+/mo cable service and they are just happy with their ATSC/DVD/HD DVD/Blu-Ray/Blockbuster/Netflix/Hulu services - so they have to act pretty fast or cable providers will lose their profitability in as little as 1-2 years.

***: why isn't it illegal just yet, I don't know - it is already a federal offense to impersonate federal agent or agencies, government officials so how the hell ISPs, cable and various other providers get away with calling a completely BS extra fee "federal"?

"Rensing insists that the services are just too different. While Hulu does offer some films, it's focused almost exclusively on TV at the moment and is ad-supported. Netflix On Demand doesn't have access to the same super-recent hit titles."

Netflix doesn't have access because they don't allow them to. That had to be the dumbest justification they could throw out there.

I think I've finally convinced my wife to drop cable TV after we move next month (Replacing with Netflix, Xbox 360, Boxee, and over the air). This sounded cool at first, but once again the film studios are behind the times. Why would you bundle a new internet service with the predecesor of the internet?

Damn, why the negativity? We have a new pay channel offering a totally free streaming service along-side its pay service, and everyone has their panties in a twist.

Isn't this the kind of service we've always wanted? The streaming is free (if you pay for the added channel), and in HD as well! What more do you really want? Completely free isn't going to happen as that would be a violation of copyright. These guys are out to make money; you do realize that?

Originally posted by Nagumo:Damn, why the negativity? We have a new pay channel offering a totally free streaming service along-side its pay service, and everyone has their panties in a twist.

Isn't this the kind of service we've always wanted? The streaming is free (if you pay for the added channel), and in HD as well! What more do you really want? Completely free isn't going to happen as that would be a violation of copyright. These guys are out to make money; you do realize that?

No we don't, we have a nebulous "coming soon*" (*if your ISP signs up for it but we aren't giving any details yet) with no details about the service. At this point there is as much reason to believe that this will be setup to fail by design simply so they can point to it as an excuse for the extra broadcast flags they've been fighting for. Considering the RIAA did the same thing with a music service at one point, and the fact that there isn't anything preventing them from licensing the movies to hulu/netflix streaming, there is some pretty strong pull towards the setup to fail possibility.

Even the page for it has an image for a link to watch something now that isn't actually setup as a link. We should be excited because they managed to host an image with flash on a simple html page and gave a nonspecific eventual release date for people who happen to have a cable company that might sign up for the service?. Their site doesn't even have contact details, company info, or any other information about who might be contacting their "affiliate sales representative" or how they should go about getting one if they don't know who it is.

Is there a way to opt out of it, if desired? I'm sure we won't "see" the charge increase, but you know there will be an increase somewhere, just not labeled "Epix".

It's bad enough that I pay for services from Comcast I do not want or use such as email or their A/V suite. I once asked to opt out of them and be given a small amount for a reduction in my monthly bill. I got an earful for that!

Free my ass. Cable isn't giving up any bandwidth or channel space that someone somewhere is not paying for in some way, and as soon as this grand experiment is over i'll bet you see an increase in a cable rate somewhere.

Originally posted by badfrog:Flash dependency, big fucking ugly "red-curtain" screen effect, bundling with cable. All this adds up to "Epyx Fail" from where I'm sitting.

quote:

Pushing out that sort of data is bandwidth-intensive, and Epix would love to avoid streaming HD content across the public Internet wherever possible.

Hmm. Yeah. That is a problem. I wonder why no-one's tried to solve that one yet... -- View image here: http://episteme.arstechnica.com/groupee_common/emoticons/icon_rolleyes.gif --

I thought that was odd to mention in the article as well. Netflix caches its servers already and I'd bet Amazon Unboxed and Hulu do as well even if it's only for the network redundancy feature. 24x7 uptime for video requires some sort of regional caching or you're at the mercy of the link to your central datacenter.

How many people even have a system capable of playing 720p Flash videos anyway? You'll probably need a quad-core 3.5Ghz system with a $500+ video card to even come close to having smooth playback (not because the video is 720p, but because it's Flash).

At least they're trying, which is a lot better than their previous attempts at entering the digital age, which to-date, have included: whining, blame-shifting, mis-representation of facts, lobbying legislation and litigation. Perfect service? Probably not. Better than what we had before though.

No we don't, we have a nebulous "coming soon*" (*if your ISP signs up for it but we aren't giving any details yet) with no details about the service. At this point there is as much reason to believe that this will be setup to fail by design simply so they can point to it as an excuse for the extra broadcast flags they've been fighting for. Considering the RIAA did the same thing with a music service at one point, and the fact that there isn't anything preventing them from licensing the movies to hulu/netflix streaming, there is some pretty strong pull towards the setup to fail possibility.

Even the page for it has an image for a link to watch something now that isn't actually setup as a link. We should be excited because they managed to host an image with flash on a simple html page and gave a nonspecific eventual release date for people who happen to have a cable company that might sign up for the service?. Their site doesn't even have contact details, company info, or any other information about who might be contacting their "affiliate sales representative" or how they should go about getting one if they don't know who it is.

Well the broadcast flags aren't a problem in the rental market but yeah otherwise no. Now as far as the site. I think they're two audiences, the cable company (who should already know about this), and a teaser for the rest of us. Plus we can bug our cable guys if they don't.

First, locking this into cable providers is not an innovative business model. It's the same business model. I'll stick to my methods thanks.

Next, they're pimping this service over netflix. They restrict what netflix can release over their instant service. That is anti-competitive behavior. They provide the content. They're trying to maintain their lock on distribution. I say NO! I say I am the new consumer. I buy what I want, how I want, on my terms. If you don't want to provide that, take a damn hike. I get what I want. You should be there to offer it. If you're not, your loss.